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Write underwriter company

[Music] the term underwriting is very common in the world of finance loans insurance investments all need an evaluation of financial risk this is done by an underwriter insurance underwriters our professionals who evaluate and analyze the risks involved in ensuring people and assets let us understand the importance of underwriting by taking an example an agent of an insurance company is happy that he was able to sell a big policy after a long time the premium is high and the commission is great his numbers are looking great after this sale but within a short span of time the agent is having a difficult conversation with his boss the policy he sold has filed a claim the claim amount is huge this was not expected what could have gone wrong the insurance company's investigation found that the policy should not have been sold to that particular customer who was a high-risk individual the insurance company should have carefully evaluated the policy and identified the risks they should have looked at past experience on similar risks and taken that into account the company should have refused to issue the policy or should have adjusted the cover with customized terms and conditions or should have adjusted the premium along with a combination of customized terms and conditions an experienced underwriter could have made all these decisions [Music] an insurance underwriter selects a risk prices coverage with appropriate rates influences policy terms and conditions and monitors the decisions made [Music] let us take an example before getting into the details of the functions of an underwriter an insurance company receives an application for a car policy the individual was at fault in two accidents in the last few months the underwriter after evaluating the application can decide not to approve the application given that the applicant has a bad record or classify this as a high risk so the premium charged would be higher or adjust policy terms and conditions to keep the insurance companies liability under control so instead of standard policy form wordings this applicant's form would be tweaked to limit the exposure in case of a loss the underwriter would continue to monitor this and several other applicants who fall into the same category this would help them understanding the losses occurring in this category which could help them decide whether or not they want to continue approving such applicants now let us take a closer look at the underwriters functions first selection of a risk every approved insurance policy means that the insurance company has agreed to assume the risk of a certain amount to protect its finances the insurance company will have its own threshold limit amount beyond which it cannot accept any risk this means they cannot accept all applications hence they would carefully screen all applicants and choose only those applicants for whom they determine that the probability of loss is limited or minimal it means that they avoid adverse selection further they would...